good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. and we are looking forward to spending some time with charles plosser this morning. that conversation will begin at 7:00 eastern time. first, though, let's get you up to speed on the morning's top stories. joe mentioned the markets and the bullish run we've had. the s&p closed at a record high seven times during the month of october. ending the month by about 4.5% up. if you look at the october 9th lows through yesterday's close, the u.s. markets are up almost 6% or greater. and with just two months left in 2013, check out the year-to-date returns. the dow is up almost 19%. the transports up by 31%. the s&p up more 23% and the nasdaq about 30%. pretty phenomenal year-to-date. if you take a look at the futures this morning, you're going to see some green arrows once again. dow futures up by 30 points.

s&p up by just under 2 points. in global market headlines, china's manufacturing sector strengthened further. mixed signals in important areas, including export orders suggest that any recovery will be gradual. take a look at what happened overnight in asia. you'll see that shanghai and hang seng were barely higher. the nikkei was down by 0.8%. the big news out of europe this morning, royal bank of scotland, rbs announcing it will move $61 billion of toxic assets into an internal bad bank. the early european trading this morning, you've got some red arrows. but that's only down by about 16 points. we'll see what happens as we get further into the trading day. we'll have more from ross westgate in just a few minutes. andrew, over the to you. >> thank you, becky. we have corporate news this morning, as well. aig's corporate earnings top wall street. some analysts were looking for better results in the company's consumer line business. the ceo was on the closing bell yesterday talking about the

economy and the broader business environment. >> it was lacking is enough confidence to take risk toes create jobs. i think that's the big issue here. but people are maximizing what they have. they're not doing a lot of new things. so for aig, we continue to grow. we continue to grow across the board, both in the united states and around the world. but it's a matter of our clients are a little bit more cautious. but i don't know that this quarter or next quarter that you'll see any effect on our business materially. >> and stores products retailer container store, they raised $225 million. the ipo was priced at $18 a share, the top end of its increased price range. stairs are set to start trading on the new york stock exchange today under the symbol tcs. microsoft co-founder paul allen's fund is suggesting microsoft spin off its consumer business. this is big news. the man who manages allen's fortune is now suggesting that microsoft search and xbox

business res deextracting from the software business which drives earnings. so i mean, paul allen and bill gates, i don't think they're -- they've been spending@of time together these days, anyway, joe. >> no. and the roys. these guys found or fund companies, whatever it is, they don't -- i don't know, over the years, things happen. i think we'll always be together. >> we'll always be together. >> i saw a picture of gates on the ft today. interesting. which is more important, connectivity or a malaria vaccine? if you think connectivity is the key thing, that's great. i don't. it is interesting, i think. you went for halloween last night, andrew. did you pick one building and just -- did you finish it? >> yes, we did. >> did you just pick one? >> we picked one building. we went up and down and up and

down. >> i was kidding. i was kidding. honestly, you picked one building? >> yes. because by tend, max? henry, they were tired. they wanted to go home. >> and i mean, to get a pumpkin, you had to rent a car to drive to a pumpkin patch. >> we like those pumpkins from yesterday's show and thought that was the coolest thing. i still think that was the coolest thing. >> come on, you didn't actually put that out, did you? >> no, no, did not put it out. but we had a couple of people who came over after for pizza and they saw them. >> becky, you want to do what you did. it was pen nell penelope's birt. i brought her the picture of me on a pumpkin. here's your present. it has a thing, you can light it up. i wanted her to put it in the window so people would come and say oh, my god. what a jerk. >> what a jerk. >> and as you said, pass out instead of candy, signed head shots. here you go. here you go. >> wow, huh? huh? anyway, it's -- we didn't

have -- it was raining, so there wasn't a lot of people that came by. >> we only had two. >> we have a lot of candy left. >> we do, too. i was going to bring it in here. >> have you ever lifted how heavy it is? >> yes. >> and then you know what's next, thanksgiving and then christmas. >> i know. >> this is a very -- you know, this is where i do get mad at you because you're so thin, you have to problems with -- >> oh, no, no. >> andrew can eat six doughnuts and get away with it. >> not true, not true. >> anyway, let's check on the markets this morning. and then we'll get to some of this other stuff that's been happening. >> like what? joe biden. >> and i believe those guys. we'll talk about it in a second. but up 31 points on the dow. it's been a great -- i'm still going back to -- i don't know. suddenly i'm remembering that i said the market would be up 35% in 2005 and i'm bitter at people that laughed at me. so we're up like -- not you. there's other people that tweeted and --

>> i agreed. >> i know you did. how much are we up, 60% since 2012? >> i don't know. >> anyway, we're up a lot. let's look at oil. today i yelled at the guy at the gas station and said why didn't you -- i don't like it when they don't top it off because then i have to get it too quickly again. and it was only -- the price that you paid i said you didn't top it off and i looked at the price and it's like 60 cents less than it used to be. >> your ocd is coming out. >> it is. >> but it was $3.30. this is a tax cut for everyone, but it's not good for exxon, as we saw yesterday. >> do you think it's coming back, or no? >> oil? i hope not. >> even walmart said it's a tailwind, but offsed by the headwinds of higher -- >> i'm still forecasting $20 a barrel. i'm hoping for that for our friends in the midwest. let's look at the ten-year note. friends. saudi arabia doesn't even like us any more. 2.56% now on the ten- year. >> you can do it for your

friends on the l.i.e. if we get down to 20, we'll -- >> that the. which is you when you rent a car to go out and get a pumpkin. >> this is getting better because germany is messing up with their export driven economy and there's no inflation. in fact, they're going to have to try and engender some inflation. one of the lead stories today is how low inflation in thor row zone is right now, which is, you know, raising the specter of -- and fear of deflation, which isn't good for anybody. i guess we'll go to europe first before we talk about all this other interesting stuff here. >> we have to talk about your friend, randall. here is the guy with the inflation problem today. it's all red behind you. we are starting to maybe the do the day of the dead over here, which is a mexican holiday, i think. yeah, a mexican holiday. we're starting to do that here. but you don't even -- do you do

halloween over there, ross? >> yeah, we did. when i grew up, joe, halloween didn't really exist. and now as far as i can tell, we special a fortune on it. my children, i was out with them for about an hour last night, dressed up, collecting sweets. it's become a massive commercial event. i blame you guys for this. yeah. do you have any good american candy over there? do you give that inferior i don't know, what is it? i guess you guys did chocolate. >> we have some great sweet companies. like round tree and -- >> cadbury. all right. nobody is hanging out sfp. >> kraft. >> nobody is handing out hagaths and bangers or mash, they're not putting those in kids bags, right? >> no, no. we might do more of that next week. we get november the 5th fireworks celebration. you're all messed up. why would you have fireworks on november the 5th? >> because that's when guy forks

tried to block parliament? >> that's when what? >> guy forks tried to blow up -- he tried to kill king james i way back in the 1700s. we still celebrate. >> that holiday is older than this country. >> you're still talking about something that happened in the 17th century. pathetic, isn't it? >> yeah. >> i think it's cool. >> fireworks were for july 4th. which is a great day. >> isn't that when they showed his mash with the moustache? >> is that it? >> is that right? isn't guy like a white mask with the moustache that sort of represents him now? >> yeah, there is that and what you do is you make a guy, you stuff -- you get some old clothes. you stuff it with paper or whatever and you put him on a bon fire. >> is this like the topless woman that puts the moustache on her? have you seen her? >> no, no, this is what it is.

>> you know it's legal to be topless in new york now? >> it's legal? >> she got $40,000. she got all of her expenses, all of her legal fees paid. >> it was weird. >> anyway, sorry, ross. go ahead. we digress. >> just a little bit. we are to the down side, not by much, joe. it looks worse on the heat map. around about 6 do 3 decliners currently outpacing advancers on the dow jones stoxx 600. the ftse yesterday was down 46 points. fairly slim losses this morning for the uk market. just off six points. there is some focus on the part nationalized rbs. it's creating an internal bad bank to separate 38 toxic bounds of assets for the rest of the business. rbs stock, though, it is down. now there was a consideration over whether they would split the bank in two. that's not happening. but the stock off 4%. the lender is in worse shape than we thought. the losses narrowed in the third

quarter, but it's setting aside another 200 million pounds for a pension. it's warping of a substantial full year loss, though, asset spikts combat and litigation charges to continue. the french market is down, dragged lower by renault today, off 5% and renault is down because of its partner, nissan. the auto giant reported earnings and has cut its profit outlook by 20% for the year. nissan was expected to put second quarter earnings on two.. they brought it forward. so not great news .that's dragged renault down, as well. you caught up with the euro. wanted to look at this move we've had on euro/dollar over the last few days. remember, the two-year high we reached at the end of the last week. 1.3533. at this timier we were trading above 1.37. the biggest one-day fall we saw in around about 16 months. core inflation in the eurozone is running at core 18%, which is

the joint record low. there are some concerns that the eurozone is facing deflation. it will be interesting to see how the ecb responds to this next week in their meeting. some houses are saying they should be cutting rates as a result. quick look at where we stand with bond markets, as well. bund rates today, pretty steady at 1 .67%. that's where we stand right now here in europe in the last trading day of the week. back to you guys. all right. thank you, ross. i've got some washington news. we'll do it all now. dismal debut numbers for healthcare.gov. documents released by the house overknight sight and government reform committees show just six enrollments managed to make it through the system in 24 hours. notes from a center for consumer information and insurance oversight, war room meeting on october 3rd say a total of 248 enrollments had been processed by that morning and that contrasted with the obama administration's reports of more

than 6 million unique -- that's a big -- >> i understand why they don't want to give out the numbers. >> the health and human services department has said it won't release enrollment figures until mid november. >> they're probably better off that way. >> that's what sebelius said. >> mid november, i'd do -- >> jan 1? >> yeah. mid 2015 and see what happens. we have other news, president obama has reportly ordered the nsa to stop eavesdropping on joe kernen. no, stop eaves dropping on the headquarters of the imf and world bank. the order is said to be the latest move, of course, by the white house to demonstrate its willingness to curb at least some surveillance in the wake of weeks by former nsa contractor edward snowden. a number of comments about janet yellen starting to come from the senate.

richard shelby says he would oppose efforts to block her nomination with a filibuster unless some disturbing disclosure emerge. his comments come after senator rand paul said he instead to withhold her nomination. and senator lindsay graham has vowed an effort to block white house nominees until the obama administration comes forward with more information about benghazi. shelby's comments are important because democrats would need to pick up only five republicans vote to clear procedural hurdles and bring yellen's nomination to a full senate vote. yellen's nomination needs only a simple majority. joining us this morning from washington is eamon afterers. this is getting back to some tense times in the senate when it comes to these nominations. we thought we had averted these issues. >> mccain threatening to pu put a whole here on janet yellen in

the united states. they wanted to see more of these documents related to ben fwazzy. they wanted to see the survivors of benghazi testify on capitol hill. they would like more information as to what exactly happened there. they don't have any particular animous towards janet yellen herself. this is just the leverage they have to get this done. it's been a very bad week for for obama admin appointees. yesterday, the senate rejected mel watt, the housing agency nominee for the obama administration. it's a very rare thing for a sitting congressman to be rejected. but they did that yesterday in the senate. it's a tough time here for obama getting his nominees through. we expect that yellen will go through here. they can break these holes with a 60-vote margin. we expect that that's doable or that this will be negotiated and resolved before we get to crunch time here. but it's something to keep an eye on, definitely. >> yeah. you know, when i first saw senator mccain, it was like, you know, we tried obama care with

the government shutdown. now year doing benghazi. as much as i'd like to have info on benghazi and the way that whole thing was handled, but i don't -- i can't see the connection here. i was fascinated by the biden story. if you remember that first debate, obama was just, like, he was on -- not interested, like why am i here, do i really have to do this? and biden came in and saved -- >> i don't know when those conversations were taking place and for anybody who didn't hear it, it was reported that they thought about dumping biden for hillary clinton. >> but what we're finding out -- >> and the report is from a new book called double down. this is a sequel to game changer 2008 campaign book. they have done another book going inside the 2012 campaign and they've come up with some blockbuster details, including the fact that they were looking at replacing biden as early as 2011.

>> and daley said i don't know if the prt weighed in on it. the president, i don't think he knew. he didn't know about, you know, the nsa with merkel. he didn't know about any of that irs stuff. he didn't know about the problem with the whistle -- all i know is he's mad. he is mad about -- well, he's mad about the merkel thing. he's definitely mad about the irs. i think he's still mad about the website. nobody is madder than him about the website. so i figure he's probably mad about this biden thing. but to be not consulted -- young he was consulted on the biden thing? these people are making all these decisions? >> i'm sure he was consulted on the biden thing. >> this would be one of those things, joe, where they're poll testing. these campaigns are big, sprawling enterprises. a lot of people running around. >> eamon, that's praet big thing. when is the last time a vice president was dropped after the first term? >> no question, no question. it's a huge thing. and, you know, clearly -- >> how far do we think it goes? >> that's my question, how far

does it really get? and i have to read the book to see what they've reported. but the question is, how far did it get or was it something at a lower level, at a daily level they looked at and disruchted. >> just a second, eamon, do you think sdulzs like that take place without anybody running it by the president. >> good i think it's possible, yeah. >> that's a huge undertaking. >> it's not an undertaking at that point. it's just an idea. >> although the risk about when it gets out -- >> what happens if there's one or two strategists sitting around in a room -- >> but it's not. there's polls that were taken. >> what if they say we're putting together a poll for tomorrow night let's throw a question in there and see what happens. if it comes back that we should look at something else, we'll sxlorp it. >> in the excerpt that i've read

of the book -- and i haven't read the whole book -- but daley is quoted in reaction to this saying, look, in 2011, the president was politically cratering, having a difficult time and we looked at a lot of different ideas. that's the way he described it and that seems to be what happened here. but it would be an astonishing thing to throw out a sitting vice president, especially one that has been an asset to the team the whole way through. if there was a scandal or a problem, you could see it. >> and this is the only guy willing to work with republicans. and andrew, if the president didn't know, at least the next time he sees joe, he can go, geez, i don't -- think if he did know. what if biden ever does reappear, i don't know where he's been, but -- >> my question is, when did biden find out about this? is he finding out about this at the same time we are? >> yes. has he even heard about it yet? where is he? >> exactly. he might pick up his paper this

morning and say oh, my god. >> where is he been? he's still in the dog house gore going around harry reid and negotiating that budget deal. >> the last time i saw him, he was wearing i'vaters in the white house driveway and going out to eat with president obama. >> i've developed a liking for him recently. he was wild eyed and shook up -- that got the president back on track. >> they needed that. they needed performance from biden in order to get the president focused again. absolutely. no question. look, biden is somebody who has been -- he's a target of a lot of abuse and some mirth. but he's somebody who has been rock solid for the president. the one thing that the obama people really don't like is that biden got out ahead of the president on the gay rights issue and gay marriage issue. >> they don't like that. >> that's something the president tsh. >> that helped the president a lot in the election. they should be thanking him for that. >> it is a huge issue and biden has become a real hero on that

issue with that political base. and that's something that portends to biden's future. don't count him out entirely for 2016. he's somebody that will take a look at this, absolutely, especially if hillary clinton knot in the running. >> compared to hillary, his numbers aren't good. so that was not a white house trial balloon that he put up on marriage equality? you think that was off-the-cuff? that's amazing. >> i think it was off-the-cuff and i think it's how he truly felt. >> good. because we never hear how anyone else truly feels in most administrations. >> no, you don't. honestly, you don't. you hear a lot of poll tested stuff in this town is very carefully crafted and massaged and messages. they say in washington, it is a gaffe when you accidentally blurt out the truth. >> when their lips are moving, you know they're probably not telling truth. anyway, thanks, eamon. coming up, if you get nationwide with this one, and i

get in trouble for this one, we have a story for you. new faa rules -- >> you get annoyed with them? they get annoyed with me. i get nowed with them. it's annoying. we're going to talk about it. first, we have a little bit of squawk sports news this morning. the dolphins blew a 17-3 lead in the second half -- >> blew a 17-3 lead but eventually beat the bengals in overtime. sorry, joe. andy dalton was tackled in the end zone for a safety with 6:38 left in overtime to give miami a 22-20 win over cincinnati. >> i saw the first half. >> as we head to a break, take a look at the weekend forecast. we've got to weather channel's reynolds wolf back in the house. >> in a jacket. look at that. >> how are you region reynolds? >> how are you doing? the eastern third of the country is going to see some form of rain and winds. winds very strong in parts of the northeast at times. showers across northern plains.

desert southwest, california, no problems out there at all weatherwise. for the weekend, snow showers are popping up. parts of the eastern great lakes. maybe some through portions of ohio. nice and cool through portions of, say, the mid-atlantic. and let medical at the you today, it's not going to be too cool in terms of travel. could have some backups, maybe even into new york, as well. a moderate backup day for you in both location necessary atlanta. maybe some volume issues later on, but by now, smooth sailing. folks, more on "squawk box" coming up in just a few moments. sit tight. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform.

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time now for the executive edge. some controversy surrounding obama care is hitting close to home on capitol hill this week. lawmakers are being forced to decide whether to move their staff into the new insurance marketplaces tied to the health care overhaul or keep them on their existing plans. introduced by chuck grassley more than three years ago and included in the legislation requires lawmakers and their age to purchase insurance coverage on the online marketplaces by a deadline at 5:00 last night, lawmakers had to decide whether to fully follow that requirement or to exploit a loophole that allows them to keep certain staff on their existing health insurance plans. the latest i had heard was that pelosi and boehner had decided to move their staff on to the actual plans, the insurance plans. i think there were some

democrats who were considering keeping some of their staff on them and some republicans, too. >> i like the idea of a dose of your own medicine, right? >> yeah. >> it's supposed to be a good thing, andrew. you're acting like it's a -- >> yeah. you think it's great when you have it. >> no, no, no. the point is -- >> that's what the republicans were thinking. when grassley introduced it, he was like, you like this, democrats? now you're going to have to use it. >> everybody in washington should feel the way everybody in the country feels on everything. that's the only way they're going to be able to -- >> let me know when you give up your comcast -- >> i'm very happy with my -- >> well, if you liked your plan, you can keep it. >> i'm very happy with my plan .i am not working for the government. >> if you like your plan, you can keep it. >> the congress is exempt from a lot of rules that they pass. some of the ocsea laws don't apply -- >> it was weird that grassley introduced it to try to put the heat on his democratic colleagues to have them have to do it. now all of his people have to do it. >> we'll see where the rest of

these stories come down. also, though, we should tell you about the treasury department announcing americans who use flexible spending accounts for heths care costs may now be able to carry up to $500 of expiring money into the next year. traditionally, if you had an fsa, you faced a use it or lose it deadline of december 3 e. this was your money. you could put up to $2,500 aside. if you didn't lose it, though, you lost that money. >> this is a big deal. >> for 500 bucks. >> yes. there's people all over the country losing this money regularly. the big question becomes companies like wage works and others -- >> wageworks stinks. >> that administer these programs, the money for them is in taking the -- is in the money that you don't use. >> i know. i don't do this any more. wage works is a terrible program. i don't do it any more because they try and go after you. it's your money that you've set aside, but they give you such a hard time about using it. they wouldn't allow me -- when i was in the hpt for having a baby, they were giving me so much grief when i was on

maternity leave, they were giving me a difficult time about using it. i never ended up using any of it so i canceled it and never went back. >> now that they're going to have this patrolover program, what does it mean -- >> wage works gets to keep the money that you don't use? >> that's my understanding of the -- >> sure. that's the entire proposition of why it works for them. >> that's why they give you so much grief. >> but hold on. the other piece of it is is companies like a comcast don't pay too much to wage works. they may pay nothing. i don't know what the arrangement is because effectively, the profit -- the business model is in -- >> is getting you not to use it, which is why all of a sudden after we had wage works for a year, the second year they stepped it up and they wanted notes from your doctor on every single thing. it wasn't just enough to provide receipts. i got in a massive argument with them. i was in the hospital having a baby .they were accusing me of having plastic surgery or something.

it was unbelievable. >> i'm sure they're thrilled that we've gone this segment. >> yeah. you stink. let's get to this last one. the faa is loosening rules on electronic gadgets during flights. you will soon be able to use ee readers, smartphones to your trip. and voice call res still being banned during the entire flight. andrew, i know you're -- >> hold on. but there's good and bad news here. the good news is you can use your device to read or whatever you want to do, listen to music, things like that. the bad news is you have to put it on airplane mode so you can't use the internal. what i don't know -- >> you can't use the internet? what if you use wi-fi. sf >> hello. you can use wi-fi once you get to 10,000 feet. but on the ground, they're going to tell you to put it on airplane mode. so all these people, including people like myself who are always hiding at the last minute trying to send that last e-mail, was going to happen -- before they could tell you to put it

away. now i don't know how they're going to police this. and the policing, as you know, can get very complicated and get a little tricky. >> my entire take on this is i don't think -- i didn't think of any of those things. >> really? >> no. all i thought of was so -- >> airplanes. >> i'm on airplanes all it is time. all this time they were saying you definitely can't use this. because -- well, we think it might do something. you know, we don't really -- it just might do something. now we think it probably won't do anything. we're pretty sure it probably won't, but what was this all about for the past 15 years? >> control. >> no, no, seriously. >> does it -- does it mess up? do they knot not know they have a single instance where it messed up the electronics? were they waiting to see it? >> there's two issues. there was a lot of anecdotal evidence by certain pilots who would file reports saying that they believed there was some problem or something happened as

a result of something on the plane. also, older planes -- and when i say older, planes in the '70s and earlier than that, and i'm sure there's aviation experts who will disagree with this, but there was an argument that the planes weren't shielded in the same way. meaning the electronics of the plane were not shield. >> if you were going to outlaw them, you would have an idea if there was or wasn't interference. >> they banned them back in 1966. they're still saying -- >> this is a reflection of government bureaucracy, too. so we were doing -- it was so important that you would get in arguments with flight attendants and alec baldwin and it was like, well, we don't really know. >> there's concern that it could be interference that come from cell phone towers. >> and now there's not. >> we're pretty sure. >> we don't know for sure. >> hopefully nothing happened. >> i have been told one other legitimate reason for all this. which was the safety thing.

which i think is actually still real, which is on takeoff and landing, you don't -- >> you have to put your laptop away. you still have to put it away. >> but you can keep headphones in. there was a view they don't want you i wouldn't see using electronics. >> he said that yesterday. >> they may have to? >> i just think the whole thing is so -- we're pretty sure that it might have been doing something. now we're pretty sure it's not. it was just so -- you should know these things. and it should be -- to know that you should know the physical 3r079s of what you're doing. you should be able to say with certainty, either -- and if it wasn't doing anything, what was this about for 12 years? and now is it -- is it definitely not doing anything or we're pretty sure it's not doing snig? i'm confused about the whole thing. you're just thinking about your last e-mail to who? to whom? >> oftentimes to my wife. >> oh, good answer. good answer. >> i do. >> you know what? i don't play -- any more, so i don't care if i have to take it off. >> that's the only thing you

missed from your blackberry? >> the only thing i missed. >> or those e-mails i'm sending to you. >> the epithet is deleted. >> you guys continue your lost fest over there. when we come back, the new apple ipad air goes on sale today. one was just delivered to our set. we're going to get a sneak peek right after this. but first, are you looking for weekend reading? go to squawk.cnbc.com for the latest edition of the talking squawk blog. it features our sidewalking dead halloween special, plus an apple a day and team danica invades the squawk set. >> it was wonderful. bravo. >> i love that. >> it was great. >> it was pretty good. >> there were parts of it that weren't very good, though. >> i didn't really like it. >> it was pretty terrible. >> it was bad. >> it was awful.

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welcome back, everyone opinion it's time for your squawk planner. on today's agenda, we have quarterly results before the bell and after the bell, berkshire hathaway will release its numbers. analysts will pay attention to how much the government shutdown impacted auto sales. and apple's new ipad air goes on sale. . it is the thinner and fastest ipad today. at&t extent one to us on set. andrew, it's in thebly lighter.

>> noticeably lighter. i know it was 1.4 pounds and now it's 1 pound. >> that doesn't sound like a big different, but when you hold it in your hand, it is. >> and also it's still smaller. >> if you stick knit your purse or briefcase or something, lights light per. >> and the screen is better. >> i don't know if it's better, the screen -- >> it doesn't seem any smaller. same size screen. >> i'm diagnosing it. are you going to get one? >> no. i can't really tell. >> you can't really tell? are you kidding me. >> yeah. the weight has never been -- i have it in a case and i put like a -- >> but you don't bring it with you everywhere. >> no, i don't. >> for me, if i'm sticking it in my purse, it's a big deal. >> you need like six devices. you need one with a keyboard, you need one with -- >> true. >> right? you've got two devices. an iphone works really well, an iphone 5. if i'm at home -- but i don't carry one of those things around. >> we're going to just give you

a quick update in our last -- >> oh, yeah. we talked about the fha -- >> should have never done this. >> the wage works and the whole situation. apparently it's not wage works that keeps the money. your mroer gets to keep the money. >> traditionally, they use that money to pay wakeworks for the administration fees. >> is that how is works? >> yes. my understanding is you can use the money for three things. donate the money to charity. they can split it up among the workers who participated in the health plan or they can use it to jau set the cost of administering the program. >> so basically that's how you pay them. >> and that's how you pay them. >> they can't give them back to the employees because that would invalidate the fund's tax exemption status. but it's still ridiculous when you have to prove to them how you're using the mope. a receipt should be enough. you shouldn't have to have an itemized receipt and a note from your doctor on top of it and triplicate copies of everything.

>> i'm still on the you must turn that off. the pilots, it can influence the readings in the come pit. oh, never mind. never mind. no, it's okay. >> i agree with you. however within there were like 4,000 -- >> it's probably okay. go ahead, use it. >> that is the most bizarre -- my kids are so happy. but when i heard it, it was like, is it or isn't it? ten years you've been yelling at us to do this and oh, never mind? that's weird, andrew. >> i'm not going to disagree with you. >> you're just happy. >> i'm just happy. we are going to go to a guy -- i was just on an airplane, actually. the failure of the obama care website continues to grab headlines, our next guest says we have to address other health care issues. dr. john is the president and ceo of the mayo clinic. and it's good to see you this morning. >> thank you, andrew. good to be here. we can talk about wi-fi on airplanes later. but on obama care, if you could

run this thing or fix this thing, what would you do? >> we would recommend that the way physicians are paid and health care is reimbursed is modernized and reflects better outcomes at lower costs and deals with technology and helps us take what we know and share it with others in a more efficient way. >> john, how anxious are you about this technology? we'll call it a glitch. i don't know if that's the right word, even, and whether you think we're going to get through this or not and how long is it going to take? >> you know, i think it's hard to know how long it's going the take. it's a technology problem, but below that, we have to get back to how health care is reimbursed. right now we're reim busing volume of care, not efficiency of care. so we look forward to seeing that revised. this week, the senate finance

committee and health ways and means have put an outline together that moves us on the first step towards recognizing value and quality and health care and that's a good thing. >> it is a good thing, but the conversation we've been having for a very long time and we have not made much progress. why are you more hopeful today that we are on the right path? >> this week, we see some bipartisan and bicameral movement in that direction to recognize the need to pay for higher quality care and more efficient care. it's the first step. >> doctor, you probably heard that practicing medicine is a -- it's an art, really, not a science. and when doctors are trying to even diagnose things, sometimes it's the -- you know, they prescribe a few things and then they realize what you had after something finally worked. i don't see how it can be pay performance like a job and a normal business where, you know, hey, if you do well, you get paid. if you don't -- how could you design a system, really, that's totally dependent on favorable outcomes? it seems like a difficult thing

to do in practice. >>el with, i think it is difficult. but our current payment system doesn't begin to look at the complexity of care or the range of outcomes. there's nothing in there to really motivate and stimulate moving towards a more efficient system. in nearly 30 years of practice as a neurologist, seeing patients with complex care, probably 30% of the patients say were misdiagnosed and had the wrong tests done and some were treated inappropriately and that causes a lot of waste. >> do you get your money back from the doctor if that happens or the guy loses his license if he does it enough times? i don't see how you do it. >> i think this is a stepwise approach to say how do we measure outcomes? how do we look at readmin rates, rate of infection and then have a transparent database that patients can look at and say who gets it right more often and wa contribute toes that? so i think that's where we need to go. >> doctor, one last question. does obama care deal all the

with the reimbursement issue? does the reimbursement issue get better or worse under the program that's being implemented? >> the affordable care act is basically insurance reform. eligibility and access and basically they're going to pay for that by reducing the reimbursement. it doesn't mannerize how we drive to higher quality care. >> it doesn't change the reimbursement at all. doctor, thank you for wake up early with us this morning. >> appreciate it. >> he went right to the -- the glitches. so inconsequentials compared to the real problems. still to come on "squawk box," our new "squawk box," our nextmaker -- i thought it was squawking dead. a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others.

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still to come this morning, president obama calling for an expansion of foreign investment into this country. we will talk to the president of seemans usa about that topic right after this. i love having a free checked bag

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we're talking about investment in the united states this morning. joining us now is the president and ceo of seeman's usa. and running through the entire thing we're doing here, eric. and even this entire summit, i just keep reading about fracking, natural gas and energy. and it's a huge opportunity for this country and other countries investing in this country. >> absolutely. i think a lot of people have talked about the fact that this is a game changer. but i don't think people really understand the magnitude. we're talking about the biggest single area of investment in the world. and just in the fracking in the upstream, probably $80 billion to $90 billion rising to about $230 billion by 2025. then the midstream, all the pipelines, trucks trains, upgrades. all the manufacturing coming online. the single biggest growth opportunity, investment

opportunity for countries in the u.s. and around the world. >> so there's people that are actually involved in the production and transport of it. and then there's the manufacturers where the input of energy costs are going to be so much lower that it makes the entire area more competitive in terms of, you know, since labor isn't quite as important if your input is that low. it just spreads out. and these are all sort of collateral areas it could benefit too. >> yeah. absolutely, if you're in an energy intensive business. chemicals, steel, fertilizer, aluminum, this is great news for you. in fact, we're seeing, i think, there's something like $90 billion to $100 billion of new plants already online. and five or six years ago, who would've thought we'd be building chemical plants in the u.s. or even steel plants, but those things are happening now. if you supply to those things, it's good. but if you're in those businesses, it's good. big advantage over europe. you see the ceos in europe saying we're at a big advantage.

our electricity costs are twice that of the u.s. and our gas prices, natural gas prices are three times as high. so if you're in one of those businesses, the u.s. will be a great place to invest. >> there's a lot of carbon hysteria in europe, as well. and there's laws that may or may not stay on the books. the one in australia may or may not stay on the books, as well. let me ask you a frank question. is it ironic that the white house is behind this push that has to do with all this hydrocarbon production? are they comfortable being big proponents of this whole new area of energy? >> well, i think if you take a look, you know, foreign direct investment is down. it was rising coming out of the recession -- coming out of the recession, but it dipped this year. going to be much lower, $160 billion, $170 billion. i think there's real concern about not only domestic investment but foreign direct investment. and energy is the obvious place. i mean, it's the one big thing

that there's a tremendous amount of money being spent. and if things get opened up, we're going to see a lot more spending. i think it's an obvious thing for the president to get on board. >> it wasn't that obvious five years ago. hopefully they're not being dragged kicking and screaming. i'm reading the headline. team up to court foreign investment in fracking. >> absolutely. >> that's a headline that just drips with irony. anyway, we've got to end at this point. we appreciate your time this morning. >> thank you very much. >> all right. see you later. all right. the economy, the taper and much more when "squawk box" returns. [ male announcer ] at optionsxpress, our clients really appreciate our powerful,

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a hawk spreads his wings and lands on the "squawk box" set. joining us for a special one-hour event. from the budget issues facing america to the next opportunity to taper, the central banker holds nothing back. and gives us his assessment of where america stands in the global economy. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc, i'm andrew ross sorkin along with joe kernan and becky quick. take a look at the futures. we do have some green arrows across the board of the dow looking like it would open up about 35 points higher. the s&p 500 looks like it would open up over two points higher and nasdaq up over seven points

higher. morning headlines this morning, as well. apple rolling out its recently announced ipad air. at&t brought it over, it's available in retail stores around the globe as well as in apple's online stores. this is the first time, we should note, this has happened in china and japan they've been included in the first-day retail launch of an ipad model and, of course, the numbers on monday will be studied closely. this is a live picture of the apple store on fifth avenue in new york. consumers there lining up, the device goes on sale at 8:00 eastern. no other product category in the world has -- >> it's raining. >> right, it's raining and they're waiting outside. it's just an unbelievable situation. also, retailer giant walmart. i'm not sure people are waiting in lines for them. but they aren't waiting until black friday to launch the holiday shopping season. it's offering online at walmart.com beginning after midnight tonight. the deals remain in place as long as supplies last. walmart didn't say if those discounts would be repeated

during the thanksgiving weekend. probably a surprise tease to get you there. and retail is a story on wall street as well today the container store making the new york stock exchange debut after raising $225 million in the initial public offering. the specialty retail sold $12.5 million shares which was at the top end of the already raised expected range. so they've got to be happy campers this morning. >> in washington news. dismal debut numbers for healthcare.gov. documents released show that there were just six enrollments that managed to make it through the system in the first 24 hours. notes from a center for consumer information and insurance oversight war room meeting on october 3rd say there were a total of 248 enrollments that had been processed as of that morning. the numbers contrast with the obama administration's report of more than 6 million unique visitors having logged on to the site over the same period. it will not release enrollment

figures until mid november. a number of comments about janet yellen starting to come from the senate. among the latest, senior senate banking committee richard shelby says he would oppose with a filibuster unless some disturbing disclosure emerged. his comments come after senator rand paul says he plans to place a hold on the nomination unless senate leadership allows for a vote on his fed audit legislation. apple doesn't fall very far from the tree in this case. and senator lindsey graham has vowed in an effort to block white house nominees unless we get more info about benghazi. which -- i said earlier, that makes me wonder whether we learned anything a couple of weeks ago. when we couldn't really figure out what the government shutdown had to do with obama care and debt ceiling. can you explain yellen, what that has to do with benghazi for

me? >> what's weird is when i talked to senate -- >> you're steve liesman, right? >> i'm steve liesman. they say the benghazi thing is more worrisome than the rand paul thing because the benghazi thing is more out there in the public domain and more likely to gain -- >> i don't think it was handled well. >> but the connection, even though the rand paul thing makes more sense to tie yellen to the fed audit thing, benghazi and the fed and yellen, i don't really see the connection. >> considering you said where do we draw the line, is $50 trillion too big? >> you mean on the fed's balance sheet? well, you asked what is the number? >> i did ask rhetorically what is the number. >> that's what i'm talking about. >> why talk to me? >> i don't know. >> i think the same of you. let's start off 7:00 in the morning with quite a few insults. >> you know what i mean, though. if we're going to talk about

something, we thought we were priming the pump. we didn't know the economy ran on qe forever. >> we didn't. >> wipe don't we bring in our distinct guests. >> did you know that? we don't just prime the pump. >> let me interrupt and say it's taken me, what, about ten years to get charlie to come to the table. let's all be nice. he said no because of you. >> he's on our side. he's on our side. >> thank you very much for joining us here today. >> it's already fun. >> great to have you here. >> thank you. >> you know, we have been going back and forth about what the fed did or didn't do, what they didn't do back in september was to start the tapering process. you've vocally been a critic and said you thagt they missed an opportunity. >> i think from my perspective the economy's outlook hadn't changed that much since june. i think the fed can do little about the near term. i think it's important to keep our focus on the intermediate to

longer term. and if you look at the forecast, our forecast for, you know, 2014, 2015 really didn't change very much. >> yes. i thought we kind of missed an opportunity to make a small gesture to begin signaling that, in fact, this is a dial we can move and we can adjust it and fine tune it, if you will. but i'm worried that might be -- i think the difficulty of us doing that in september, signals may be using or thinking of qe-3 as some kind of thing that we can move around with some precision or fine tune, maybe a very difficult thing to do. >> seems to me the fed was setting a higher bar for pulling back any sort of quantitative easing. what will change, though, is the voting make-up of the fed you're not a voting member, but you will be in january. that will be enough. a different set of people voting around the table? >> i don't think that really makes that much difference. you know, the language and the

nature of the discussion. building a consensus for actions. not always successful at that. and you can build a majority. and that's always going to be the case. i don't think it matters that much at any given year what the voting composition is. >> you talk to richard fisher all the time, i know as one of your colleagues. do you remember -- was it two years ago when he -- he comes on quite a bit. we hope you come on quite a bit too. he comes on and he said, look, we have done enough. we've done -- it was like two years ago. we have primed the pump. we've done enough. now it's up to the private sector and banks and everyone else to start doing what they need to do to get this going. was he dead wrong two years ago? >> no, i don't think so. i have not been -- i have not been a particular fan of the qe. i don't think it's terribly effective. i've said that way back when we did qe-2.

qe-1, i think is a different story about the motivation and the rationale for that. but qe-2 i was not a big supporter of. and we have to remember that the current program, what they call qe-3, the sort of ongoing program is now in terms of how it increases the balance sheet is already 50% bigger than qe-2 was. >> you must be very nice and very collegial because given the fact you didn't think qe-2 was necessary, you must be going crazy now with $85 billion. >> i am very collegial. >> must be very nice. >> let's talk about the way forward. the fed, the board it seems, or the committee, seemed to give us three tests for how they might satisfy the conditions for tapering. i don't know, actually, if you subscribe to those three tests and those were confidence in the outlook going forward, no concern about fiscal restraint was the second one and the third one -- wait, am i going to have a third? there we are. and financial restraint. now, looks like you satisfied

the financial restraint one. do you subscribe to these? what is the timetable for meeting those three? >> i'm not going to offer a timetable. we have to think hard. the committee has made clear, we like for our policies to stay contingent. contingent on the economy. and that's been hard to do with qe. and i think the evidence i was alluding to in september suggests how hard that is for us to sort of react to data on a regular basis. i think that's difficult to do and very difficult to communicate. it's easy to say we're data dependent, but it's much harder to say more precisely about how. we haven't been clear about that. i'm beginning to think in september was an example of how hard this is going to be to fine tune, if you will. i'm actually leaning toward the view that, look, qe-2 and qe-1

for that matter. qe-2, we announced a volume of purchases. in that case, it was $600 billion. we said we were going to buy $600 billion and then we're going to stop and see what the economy looks like and then make another assessment. i'm actually leaning to believe maybe that's a better way to get us out of this box of fine tuning and adjusting -- >> by putting a number on it? >> putting a number on the size of the balance sheet or how big this program is going to be and say we're going to -- we've already bought almost $1 trillion. >> how much room would you have to give yourself on what that number is? because the second you announce that number. >> removes the data dependency. >> well, we haven't been able to describe very accurately how we're being data dependent. we know -- how does the qe program supposed to work? it's supposed to work about the size of the balance sheet. it's how much assets we totally buy. the portfolio balance effects that creates and so the theory is it's the size of the balance sheet this providing the

accommodation. so the logic of qe-2, you say i'm going to increase the balance sheet and that's the amount of accommodation you're providing. >> so would you symptom right here? >> well, i didn't want to start. that's kind of a moot question. >> no, the train is moving. you've got -- >> my point is, i think it would be worthwhile for us to consider how do we get out of this box? how do we get out of this program in a sensible way without confusing it with our interest rate program, our interest rate forward guidance. and we've known for a long time how to move interest rates up and down and the public, the markets kind of understand that. we don't know much about how to move asset purchases up and down. and we're discovering how difficult that is. so -- and the committee was struggling over the summer with the confusion where the committee was trying to explain to the public, look our balance sheet tool is different from our

interest rate tool. >> seems to me the fed keeps putting itself in a box, though. >> what i'm suggesting, maybe we ought to think about disentangling those two by saying, here's the announced size of the program. we're going to do it and we're going to buy this much, whatever that amount might be the committee can decide on. and then when that's done, we'll look at the economy and we'll decide, do we need to do more or not? that would disentangle these things in a way that might be very beneficial. so it's just an idea to think about as a way to sort of make some progress because obviously it's very hard for us to change course on this sort of -- the way we try to do in september. very difficult. >> we're going to take a quick break. we'll have much more from charles right after -- plus, why at&t's ambitions to expand in europe can run into trouble. >> this is a big story. >> because of the nsa surveillance. >> but for american companies writ large. >> they can't come over here. >> and watch what's happening.

first, looking for a little weekend reading, go to squawk.cnbc.com, the latest edition of the talking squawk blog. features our 'squawking dead" halloween special. plus team danica, she's hosting the country music awards. "squawk" will be right back. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting. and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here.

welcome back to "squawk box" this morning. making headlines. at&t's desire to expand into europe apparently running into unexpected hurdles. the "wall street journal" pointing out that the growing outcry over the region over the nsa surveillance is becoming a problem. the paper says that german and other european officials said any attempt by at&t to acquire a major wireless operator would face intense scrutiny. and many expect at&t to make a play for vodafone as early as in the first half of the year. there's been a lot of sort of signaling they'd want to do this. i think it's a big issue for all american companies who want to expand abroad because of the nsa. and by the way -- >> communications company. >> communication companies. the flip side is we were talking about it during the break. lenovo is now interested in blackberry. by the way, president obama uses a blackberry. you have to imagine that there's going to be a conversation about whether the chinese are going to be able to spy then -- and you have a blackberry z-10.

>> a canadian company. what can obama say about canada? >> personal computers manufactured by lenovo have been banned to used by government networks united states, britain, canada and new zealand. >> there you have it. the point is, this is going to become a big back and forth. >> let's get back to this hour's special guest. philadelphia federal reserve president charles plasser. oil's down, no inflation in europe. no inflation here. stock market's at new highs. what's wrong with having the ten-year back at 2 1/2 and having mortgage rates, the housing market. if you've seen no negative consequences, have you been wrong? >> no, i think the problem is we don't know yet. that's the whole point about thinking about policy and monetary policy as having long run consequences is sometimes the costs are out in the future somewhere.

and they're uncertain. i mean, the fed often times talks about risk management. and we do. we think about what are the risks to the economy and what are the consequences. and we try to anticipate what those risks are. and many people think it's very important that we manage monetary policy with regard to those risks. i also think we have to think about the risks that our policies themselves cause. there's a risk management issue there. and it's not because that we know what's going to happen. it's because unintended consequences or the build-up of risks can be very important. i think we have to balance, not just the risks in the economy, our own risks that we're creating about down the road. and i think many people -- myself included -- i'm not alone in this are beginning to worry about the consequences of how we unwind ourselves from all this stuff. >> i would think so. >> and i think that's very important. and we have to understand there is a risk there. >> i would think -- let's say you're a u.s. corporation. if you didn't think qe-2 was a

good idea and then, i remember when qe-3 was announced and we were all just dumbfounded it was going to be $85 billion. >> so was i. >> i just -- in -- i'm surprised you don't go up to some of your colleagues and shake them. who knows. go you think there's any chance we go up from here if the economy doesn't cooperate? >> i think it would -- i think that hurdle rate's probably very high. >> very high to increase qe. >> i think it's very high. very high. so, yeah, i think the fed in fairness is frustrated. we'd like to see the economy growing better. we'd like to do what we can. you know, i mentioned earlier that qe-2 was $600 billion and the accommodation provided by that is measured by the increase in the size of the balance sheet. now we're at $1 trillion for qe-3. we haven't seen this breakout in growth that we would like to see.

seems to me, you can ask yourself a couple of questions. el with, either we haven't done enough and the 50% increase on top of what we've already done didn't help very much, or perhaps it's not working the way we would like to see it work. either one of those -- >> what if murphy's law exerts itself and we've been in recovery for five years. what if unemployment stops going down. and what if there's a slowdown globally. what if it's not our fault. we're stuck. would you change? >> as one of the reasons when i alluded to the fact earlier that maybe we ought to think about qe as what, how much total do we want to buy as a program. >> that would be a huge -- >> because then, suppose you're right. suppose you have the bad scenario where unemployment kind of gets stuck at 7%. i'm not suggesting that's my forecast. >> no, i know. >> but if you tie qe to some

sort of employment -- unemployment rate or labor market thing and things don't -- you could be in this thing for a very long time. >> they change the parameters at any point? >> if you don't set the parameters in something your willing to live by, then you undermine your own credibility. so you have to be very careful about how. like not tapering. >> perhaps. >> charlie, how much of what's holding back the economy is from the other side of washington, the fiscal side. and how much of what the fed is doing now because at least the majority of the board feels like it's forced essentially to carry the water for the fiscal side? >> well, i think there's certainly some of that. and there's certainly some feeling among my colleagues that's what important right now. i do think, though, monetary policy has to be careful about the way it interacts with fiscal policy. and i think we have to be careful because we -- we could easily find ourselves in what some people have described as a fiscal dominance regime where

monetary policy becomes totally driven by fiscal policy. and i think that's not a good place. >> how much of that is the conversation inside the room? when you were thinking about what to do in september, for example. how much of the conversation was, well, you know, we're going to get into this debt ceiling fight and there could be a government shutdown and who knows what's going to happen. >> we knew that was coming in june. it wasn't a surprise. we knew there was going to be a debt ceiling fight in the fall that was on the calendar. so it wasn't -- it wasn't new news in some sense. and, you know, i think, for me, the fiscal side i don't believe the shutdown is terribly inconsequential in terms of the economy in the short run. they're going to be small and temporary. >> and what -- >> and the debt ceiling is another issue. i think the problem on the fiscal side is not those decisions, per se, but the inability to deal with the long run fiscal sustainability. >> right.

these two keynesians -- want another stimulus program. anyone on the fed who wants to borrow more money and spend it on jobs? >> i don't. but i can't speak for anybody else. >> oh, carrying the water for the -- congress won't spend any money for us. >> how much of this is having to read -- how much of your job is having to read the political tea leaves as to whether both sides will get along on a specific issue? >> well, i think there's some of that that people think is important. i tend to try to want to minimize that because that puts the fed in terms of how it goes about conducting monetary policy in a very bad spot from my perspective. >> it did make -- >> undermines our own independence. >> did make the fed look smarter for not tapering. gave them cover for that. little comfort. >> he's not nodding, he's not -- >> take a shot of him, don't take a shot of me. >> if nothing else, charlie's very consistent. >> yes. >> they won't let us build

anymore high-speed rail between cities -- >> joe, that's not what -- >> what are you saying? long-term entitlement reform? >> i'm saying do no harm. >> i do not want to spend more money. much more still ahead from the philadelphia fed president charles plosser, plus more top stories. "squawk" will be right back. so i c

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in our headlines today, gambling revenue in macau surging to a record high. there was a week long national holiday that boosted visitation for big spending mainland gamblers. we will have more comments from fed president charles plosser when "squawk box" coming back. yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck.

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welcome back to "squawk box" this morning. president obama reportedly ordering the nsa to stop eavesdropping on the headquarters of the imf and world bank as part of a review. the order said to be the latest move by the white house to demonstrate its willingness to curb some surveillance in the wake of leaks by edward snowden. i don't know if you feel better they've stopped now all of a sudden.

or if you believe that they've stopped. but nonetheless, also this morning, microsoft co-founder paul allen's fund suggest microsoft spin off the consumer business. the financial times reporting that the man who managing allen's fortune suggest microsoft's businesses are detracting from the software business which, of course, drives earnings. also, take a look at u.s. equity futures as we speak. we've got green arrows across the board, dow looking like it'll open up about 44 points higher. real quick, we should also note headlines which have been flashing this morning, jpmorgan disclosing for the first time publicly that they are being investigated over their hiring practices in china. this is a story we've talked about a lot on the program and have been reported. >> being investigated here in the united states or in china? >> no, my understanding is the doj here in the united states s is -- all they're saying is the doj is now looking into this -- this is something that's been

reported. but i don't believe they had publicly acknowledged in any of the filings before, but i'm going to do more work on that. >> okay. great. our what's working series continues this morning with a cautious investment strategy aimed at minimizing loss instead of maximizing gains. joining us right now is the portfolio manager at international value advisers, thank you for coming here today. >> thank you for having me. >> tell us about your strategy. you're looking to minimize losses. >> that's right. we manage mutual funds as if they are family trusts, basically and pay more attention to the downside risk than the upside and we try to compound at a reasonable rate over a full cycle. >> that's a strategy that people probably flock to a lot more years in 2008 and after that. >> that's correct. >> when you say markets taking off like they did last year, how do you kind of weigh the two? >> well, people still remember the crisis. i think we've done a very good job educating our investors.

they understand the bull market will lag a little bit. but this year with only 55% in equities, we've managed to catch about 80% of the upside in the index and the absolute performance still very respectable, you know, more than 16%. >> is it a lot harder to find values, though, when the stock markets have risen so rapidly? >> it is. and we are raising cash at this point. we believe that all asset classes tend to be fairly expensive today. it's probably towards the late inning of a great bull market. i wouldn't call this a bubble yet because we don't see disruptions. we see different asset classes or being 10%, 15% overvalued, but it's not crazy and we don't see the dislocations you usually see with bubbles. we do see easy credits in the high yield bull market. we see more in flows into equities. we see variations. it's time to be a bit more cautious. there are still opportunities out there. >> we have president plosser with us. we've been talking about the fed

strategy. is it impossible to fight the fed at this point? >> well, you know, we are not macro investors. we're trying to determine the value of a business, what a business is worth. and whether interest rates or short-term interest rates or zero, 1%, 2%, 3%, doesn't change the businesses, it can change the valuation in the stock market, but not the values. and their fundamental values will be being reflected in stock markets. >> let's talk about a stock you do like, devry. >> yes. it's misunderstood by the market. those stocks have suffered mightily in the last few years. there's reform. reform long overdue to make the product better to make sure that students don't default on their loans and get a proper education. it's definitely the right thing to do. as a consequence, these businesses had to shrink their top line.

also, an interesting company, they do very well. if there's a recession, more people go back to school. there's a mix of more regulation. the wrong part of the cycle for the stocks because more people are going back to work. what's not understood about devry is you have medical schools. and in the medical schools, there hasn't been any problem whatsoever. no defaults. the number of students continues to go up, the number of campuses, they continue to open up. and you look at that segment alone, it's almost worth the stock price and you get the rest for free and the rest will eventually come back. >> did you relocate over here? are you a citizen here now? >> i am applying for my blue passport. >> do you still pay taxes in france? >> no, i don't. >> it's unbelievable, isn't it? >> it is crazy. >> you only got 7% of your assets. i'm surprised you have that much in france.

>> french companies are global. second, they've been beaten up so much. no, no -- >> i got you. >> you have no access to capital. so the only very good businesses have survived in france. >> they've got to be good. >> that's right. that's right. so they don't need much capital, they usually have brands, more towards the services side of things, they're very global and as a consequence, you do find great stocks listed in france with very -- >> you went to a french business school. >> yes, that's an oxymoron. >> thank you for playing along. >> thanks for coming in. >> thanks for having me. let's get back to this hour's special guest, philadelphia federal reserve president charles plosser. you've heard of guys that build like bomb shelters and stock it with canned goods. there are people in the past that said once the government puts in a policy or program during a crisis, it's very hard to get out of that program.

the people that are really sort of fanatical about antifed programs think this program will never be ended. is there any chance that's a possibility? and we've painted the scenario of if murphy's law doesn't allow us to lower the unemployment rate, you're stuck in a box. >> yeah, i think we will end the program. >> there's no possibility this won't end? >> no, i don't think so. i don't think that's the case. i think there's a big question as to when and how big it'll grow and there'll be debates of that some that will depend on the state of the economy. one of the reasons i liked my suggestion about -- let's put a number on it. and then if the economic conditions when that time -- this is the way we did qe-2. it wasn't disruptive at the end. we didn't do anything for a year. gives us the opportunity to reevaluate the state of the economy at some point. >> i'm trying to think of the negative things, this is a news business, we want to scare

ourselves. so if rates do ever normalize -- >> right. >> and the fed has this huge amount of bonds that it's olding, i've seen numbers of the kind of losses that the fed could take if rates went to 3% to 3.5%. what would that look like? how would that hurt the country? how would that hurt? >> i think there are two ways to think about it. one is that, you know, the fed has suggested at some point, we may not sell the assets, we'll let them mature. >> can we do that? >> you can, you can. i think one of the risks, though, we take is we don't know with a balance sheet and as many assets as we do have what the path of interest rate is likely to do and whether the tools we have can suffice to manage the outflow and credit in the economy without selling. we think we can, but we don't know that for sure. >> one of the things i always used to teach my students was, if you don't have plan "b," you

don't have a plan. and i think we as the fed and as a central banker have to think about what could go wrong and how are we going to manage in a world if things don't go nice and smoothly like we expect. and that's a challenge. that's going to be a challenge. and that's one of the risks i think we face. >> have you been surprised that inflation has been so low. >> no, in fact, if you believe some of my colleagues in the way they think about the phillips curve and the people that talk about, it's a surprise that inflation is as high as it is. so i would -- yeah, i'm a little bit surprised, but i've never said inflation was imminent. we created over $2 trillion of excess reserves sitting on the balance sheets of the banks. just sitting there, not inflationary. it will be inflationary when that starts to flow out of the banking system. that's when we we're going to have to start worrying about inflation. and not until then. i'm not predicting inflation

really soon. >> what were you worried about with qe-2 and qe-3. >> because the difficulty of preventing that from happening when the time comes. >> still is inflation down the road? >> yeah, that's one of the things, absolutely. >> a lot of extra tinder sitting around. >> it's like kindling in a fire. not burning it and it won't burn until it gets lit. and our challenge, the fed's challenge is going to be managing that process at that time. >> i wanted to ask you about the communications policy. just how the sort of steady march towards more and more transparency. do you think that's a good thing? do you think it is a healthy thing for the markets for the economy? do you think it's creating undue pressure and undue influence on things? >> so -- as a general proposition, i think transparency is a very good thing. we live in a democracy. it's important that the central bank be accountable. and one of the ways is to be as

transparent as we possibly can. between transparency and what people call discretion and policy making. transparency requires you to be clear about how you're conducting polgconduct i ing policy. and if you can't be clear because you want to be a highly discretionary policy maker to do what you think is the right thing at the right time, you can't describe that because it's discretionary. so you have this but you can't be discretionary and at the same time be clear particularly about the future path of policy. >> what's the answer then? >> i think we need to be more systematic in our policies. and exercise less discretion and more transparency. that's my -- >> less discretion. that gives you less flexibility. we're going to talk more about this. >> we have some time -- much more -- liesman's going to be back. we have more with president plosser still ahead. coming up, stocks to watch ahead of the opening bell and

then final thoughts from charles plosser and don't miss "squawk box" on monday, our guest host is going to be another fed president, st. louis fed president jim bullard. back in a moment. over the next 40 years

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when we have a fed president, we usually bring back the animal orchestra. bullard loves the animal orchestra. >> he's a regular. >> he is. we'll play the animal orchestra for him on monday too.

we figured we'd roll it out early. we'll take a look at a couple of stocks to watch. first solar reporting better than expected quarterly results, among the catalysts, the companies begun recognizing revenue from a major project in california. however, the company also cut its sales outlook for the year and it's saying revenue from some projects may be pushed into next year. the stock is still trading higher. nissan announced the chief operating officer, which stepped aside from the number two post at that company, which is launching a management makeover as it grapples with quality issues in an ambitious drive to boost market share. he has set aggressive expansion targets from nissan to boost global market share and its operating margin to 8% by the end of march 2017. but multiple recalls and a sales slowdown in china have cast a shadow over the plan. and in an announcement today, nissan also cut its next year profit outlook by nearly 20%.

and there is competition from, andrew, that korean car company -- that korean car company -- >> hyundai. however you want to do it. >> hyundai. >> hyundai. >> rhymes with sunday. >> you merged it with honda. >> i had some conversations when i was in asia -- >> which was particularly embarrassing when you're in the area -- >> no, i was in the area. >> he said hyundai. >> no, i asked him. >> what did he say? >> however i said it, he said it was right and i'll take that to the bank. >> okay. all right. when we return, we'll ramp up our conversation with charles plosser. also, you looking for weekend reading, you can go squawk.cnbc.com. plus, an apple a day and team danica invading the

"squawk" set. the address is squawk.cnbc.com. right now as we head for a break, check out the ten-year note this morning yields at 2.587%. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future.

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welcome back to "squawk." you are looking at a live shot of apple's flagship store in new york right now as we speak. going on sale in less than ten minutes in the eastern time zone. the air is nearly a third lighter than the previous ipad model. we were playing with one on the set here before. it's amazing people will stand outside in the rain for a product like that. it just doesn't happen in any other -- >> concert tickets. >> i liked it. >> i wouldn't stand in the rain for it. >> it's cool. >> it's a little lighter. >> i don't need it today. >> it's a little lighter and a little better. we're going to get back to our guest host this morning, philadelphia federal reserve president also steve liesman

returning to the table. >> i want to get -- >> you have a question. >> mocking all day long, it's so great. charlie, the gdp has been in a 2% flat kind of muddy range. the stock market is soaring. is there a disconnect between wall street and the economy right now? >> and is it you? >> does the level of stocks right now, does it bother you? >> you know, i'm not a stock picker and i'm not -- i don't like commenting on the stock market. the stock market is what it is and it'll continue to be what it is. and i don't like to think about monetary policy in terms of the stock market. >> what about the concern what the fed policy is creating a bubble that is an externality -- >> or that it was intentional to juice the wealth effect. >> so i don't like bubbles. and i don't like using bubbles because i think we never know

it's a bubble until it's too late anyway. i think that's one of the big problems. but the question is, is how will this economy play out given the way asset prices and other prices have moved over time. and will we find in ourselves in an uncomfortable situation in a year or two down the road. if it turns out that all this stuff gets unwound in some way. are we creating the possibility of volatility down the road? >> is it okay to manipulate the mortgage market? >> we haven't got time for this. >> i've not been a fan of buying mortgage back securities because i think it's fiscal policy. >> i could get you to say all kinds of stuff. >> yeah, okay. >> it's amazing. that's scary. that's why you've got to be -- >> can i try a new one?

>> well, we haven't talked about two things. one, is get your comments on too big to fail. >> where are you on where we are? >> i don't think we solved the problem of too big to fail. i haven't -- i don't think -- i think dodd/frank kind of declared victory and moved on. >> and what should the role of the fed be in solving that problem? >> well, i think the fed's role is to get itself out of the business of bailouts and so forth. i think part of the problem is, there's some corners of the market where people said we solve the problem because dodd/frank takes the taxpayer off the hook. but bailouts are not about -- it doesn't matter who pays to bail out. >> would you raise capital requirements so high they'd effectively become smaller? >> i would be in favor of higher capital requirements, simpler capital requirements, focusing more on leverage ratios. and raise capital requirements

would be my preference. >> before we let you go, we have to ask you about janet yellen. what she going to do to change the whole game. >> i worked with janet yellen a lot. we served a lot together on the communications committee. i was engaged with her getting our 2% inflation target. i think she's a bright, capable -- >> how is it going to change? >> i don't think it's going to change very much. i think she's very engaged -- >> that's the bad news? >> well, i'm not making a judgment here. i think she is -- i think she will be -- >> will she be able to lead by consensus some people say ben has or hasn't? >> i think she is very good and very thoughtful and will lead by consensus and will listen and engage in conversations with all of us. >> we're coming up on the end of the year. give us your best forecast of how next year plays out in terms of growth and in terms of what the fed does next year. >> well, of course, it depends on a lot of different things. i think growth will pick up somewhat next year relative to this year. how much?

2 1/2 or 3 next year which i think is a reasonable guess. i think the unemployment rate's going to continue to drift down slowly. just as it has for the last three years. it's not going to speed up, particularly. and i think that's where we're going to be. and we could very well be, you know, at 6.5% by the end of next year. >> when you come back in october, is the fed still buying $85 billion of assets this time next year? >> i certainly hope not. i hope the economy will pick up enough. >> we're going to leave the conversation there. thank you for being here. >> pleasure. >> thank you for being here. >> my pleasure. >> terrific. when we come back, the economic impact of the government shutdown and the new health care law and how you should invest around that. we'll talk about how obama care could impact your company's health plan. two federal rule changes that could make your life easier all coming up on the 8:00 hour of "squawk box." stick around, we'll be right back. [ male announcer ] at optionsxpress, our clients really appreciate our powerful,

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start. >> reinforce the takeoff ramp? >> no, we didn't have time. >> we'll talk to two policy experts about how the law could change your company's health plan. changing the rules, your use it or lose it health plan could roll over year to year and you could use electronic devices during your airline flight. >> i just always leave my phone on and nothing happens. >> yeah. >> plus, cnbc wealth editor robert frank doing hardship duty at the ft. lauderdale boat show. >> it's easy to grin when your ship comes in and you've got the stock market beat. the man worthwhile is a man who can smile when his shorts are too tight in the seat. >> how american yacht makers are

challenging the european establishment. the third hour of "squawk box" starts right now. ♪ welcome back to "squawk box" here on cnbc first in business worldwide. that was your homework. did you ever watch it? >> yes, years ago. >> caddy shack. the producer gave you that. it's essential information. i'm joe kernan along with becky quick and andrew ross sorkin. >> i need to rewatch it. >> you need to rewatch it, exactly. do you remember what he named the book? i christen you, i think the flying wasp. anyway, we're up about 43 points on the premarket. every day, it seems like the $the $85 billion, is it the earnings, what is it?

>> little bit of both. >> little bit of both. >> we'll take it. >> we'll it for now. >> for now until it turns around. hopefully it doesn't. we'll show you a quick live shot right now of apple's flagship store in new york, apple's ipad air officially going on sale in the eastern time zone at 8:00 a.m. the updated device goes on sale as we speak. and the air nearly a third lighter than the previous ipad model. twice what? >> nothing. >> and also, well, see, now the question is how long that line will ultimately be in the next our or two. but a little bit other corporate news this morning. new quarterly filing by jpmorgan noting the u.s. justice department is investigating the bank's hong kong hiring practices. we did know this, but this is the first time we're seeing it disclosed this way. the sec was probing that situation. the firm adding to does closures of today's filing. other headlines from the filing include that the bank recorded -- this is not a pretty

number. $9.3 billion in legal expenses in the third quarter including litigation reserves. now, that compares to the kprashl -- doesn comparable doesn't make sense. for litigation reserves in the same period ago. that's been the problem if there is one. jpmorgan says authorities are questioning the bank's currency trading, as well. and government investigations are in the early stage and in the filing, the bank says it is cooperating with probes. i will say looking through some of this on the hiring practices, it says that the firm has received subpoenas and requests for documents from the sec's division of enforcement regarding among other things hiring practices among candidates referred to the bank by clients, potential clients and government officials. affirms employment of certain employees in hong kong and the business relationships there in the asia-pacific region. that's what the story is. let's talk about some washington news. dismal debut numbers

healthcare.gov. government reform committee show there were just six enrollments that managed to make it through the system in the first 24 hours. by october 3rd, there were a total of 248 enrollments that had been processed. this was according to notes for a center oversight war room meeting. that number contrasts with the obama administration's report of more than 6 million unique visitors for having logged on to the site over that same period of time. the health and human services department has said it will not release enrollment figures until mid november. they say it takes a little longer to enroll. but again, it shows you how difficult it can be to get through that process. and markets coming off a strong october. joining us now with more on the markets, is the chief market strategist and senior portfolio manager and on the economy, wow. were you confused, austin, you thought november 1st means it's employment friday. so we're not doing that today.

>> i got up early, i came over here. what is going on. >> i know. can you come back next friday? we'll have you next friday. >> okay. >> we'll talk to you today. professor of economics at the university of chicago booth school of business former chairman of president obama's council of economic advisers. hey, austin, were you able to -- were you watching charles plosser, do you watch "squawk box" or "squawking dead." >> yeah, we've known each other for a long time. >> and you are an economist, right? >> what was that question? why did you put a question mark on there. >> no. it's because, it's like the economics, nobel prize for economics, you can be opposed in your viewpoints. and i think about the make-up of the fed and he definitely disagrees with a lot of what has been happening. do you -- where are you on this? do you think we've stayed a the this, at the well a little bit

too long or the punch bowl too long with qe? >> well, you know, you might think i disagree with everything you said, but i don't. there are many things i agree with. on the punch bowl point, though, about the fed, i think if you backed up the clock ten years ago and told people we're going to have been going four plus years with a growth rate of 2%, unemployment's 7.5% or thereabouts or above for four straight years and core inflation well below the 2% target, every economist in the world would've said, well, obviously you should loosen monetary policy if you've been dealing with that for four years. they're trying to figure out how to loosen monetary policy when the interest rate is zero. >> when you're already at zero, exactly. most of them would probably have said, well, you need to stay at zero and may not have thought of this creative way to do it. that might have surprised them to some extent. let me get -- since we're on the subject, bob, do you think the

stock market is moving higher because earnings are doing well and the prospects are good for corporate america? or is it because of qe-3? >> you know, it's all the above, joe. >> can you give percentages? >> yeah, i wish. look, i think we've had a decline in oil prices, we've had a move down from 3 to 2 1/2 in the ten-year treasury. you add that to the mix you talked about and stocks will go up when lots people have tons of cash getting zero. i talk to a lot of retail investors and financial advisers and their clients are just tired of getting zero, watching the stock market go up. >> what would happen if the fed started to taper tomorrow. i know they're not going to. when the fed says it's about to taper, does that create panic in the market? >> look, the fed has already shown us once in september, they will only do it when the conditions permit. so -- i don't want to act like it can win both ways, but in a sense i can. if they keep providing all this liquidity, that's great for the

stock market, and if they begin to taper, it will be because the economy's doing better than i get a better "e" on my earnings front. so, you know, i'm reasonably sanguine. >> at this point, it's more of a lack of viable alternatives than discounting better economic activity? >> i think that's right. look, a lot of us have been talking about an improvement in u.s. and global growth now for a bunch of months. we haven't seen a lot of evidence. i think the prospect is still there, but stocks have moved up in the meantime and it's got to be about -- i lost money in bonds this year, i'm getting zero of my cash, i don't have enough stocks. >> austin, how do you -- you just talked about the four years. and you know what an incredible forecaster you've been on jobs fridays. you've taken credit for it many times too. are we -- why are we still so weak? and do you think what happens between now and the next debt ceiling issue, do you think what we do makes a difference now?

and what should we do? >> yeah, look, those are both important issues that you raise. let's take them in reverse order. the last -- for whatever reason, every time we have a debt ceiling fight, consumer confidence plunges epic amounts. the one in 2011 is the biggest drop in the history of the series except for leemahman, bir than 9/11, bigger than iranian hostage crisis, and it took five months before consumer confidence returned to the dumpy levels it was before the '11 debt ceiling. this time, you saw a big drop in consumer confidence. if we get into another shutdown fight within the five-month period, i fear this thing could essentially turn into just a permanent thumb pressing down on consumer confidence. i'm definitely worried about that. >> and you think that's a real possibility? i mean, handicap -- >> yeah, i do think -- i was

getting heartened to see mitch mcconnell say there was definitely not going to be another shutdown because it went badly for republicans. >> right. >> but i will say with the troubles of the health plan and the rollout of the website, you got to think that the same group that said let's demand to turn off obama care or to delay it, otherwise we shutdown the government. each day that goes by without the website up, those guys are coming back. and in january, they're going to be saying, no, you know what, health care's a winner for us. let's again insist they turn off obama care. >> austin, on the issue of the tapering, $85 billion a month was one thing when the federal budget deficit was a lot bigger than it is. it shrunk a bunch. continues to shrink. is there a limit to that in your view? is that one of the reasons they may begin sooner rather than later? >> it's an interesting point.

obviously there's a limit of 100%. but i don't think that will push them to taper sooner than the economic conditions warrant. even if they're taking a bigger and bigger share of the total. i think the deficit came down quite dramatically. but now we're getting essentially to the spot where the conditions are approaching something more normal. so it's not going to -- the deficit's not going to keep shrinking at that kind of rates it did over the last year. so i don't think that's going to be playing as much in their mind. but i do think it's an important point. >> so we've got to go, austin, but since you left, we've had the shutdown, benghazi, the irs scandal, the obama care rollout. does this -- am i making clear -- >> two hours after i left, they downgraded the u.s. government. you're on to something. >> can you -- are you available to go back?

i mean -- >> absolutely not. look on the tv, there's no way they're getting me back out there. >> is this a coincidence? did everything hit the fan as you stepped out? >> it's not a coincidence at all. that's what i'm trying to tell you. >> all right. good to see you. thank you. don't make any plans for next week, next friday. >> we're going to see them next friday. >> if you can't make it, we'll get zandi or both. tlan thanks. >> good to see you. how will company insurance plans change under the new health care law? we've got two policy experts weighing in next. and later, americans buy more than half of the world's yachts but only make about 10% of them. robert frank is going to join us. what an assignment with a company trying to change that right now. take a look at the october gains in the market. [ male announcer ] what if a small company became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked?

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welcome back to "squawk box." the troubled rollout of obama care raising concerns about employer sponsored health care plans. will many americans see a sharp increase this fall? that's the question.

an the american institute. he's the founder and ceo of abalir health. hey, guys, thanks for joining us. what are we going to see in truth? we've already seen a number of big companies get rid of spousal care or insurance for the spouse. is that going to be a trend? or is it going to get even worse? >> well, for starters, that was the trend before obama was elected. so i think you've got to take it back a little bit and you'll see employers reducing the amount of coverage they give. you'll see them increasing premiums, adding copays and deductibles and that started a long time ago in truth. >> joe, what's the reality in terms of how much cost will ultimately go up for people. >> it could be pretty substantial. the fact is that obama care requires plans to be more generous. and yet in a couple of years, there's going to be a penalty

called the cadillac tax if you have a plan that's too expensive. so you have this movement and employers and employees are caught in the middle. >> joe, policy question, though. if it costs more for people on a yearly basis or monthly basis, is it -- is it ultimately going to make health care cheaper because it's going to force people to make decisions that they otherwise would not make? >> well -- >> that's what this is all about at some level. >> right. i mean, the big question is, are these increases going to actually cause the health sector to become more efficient and cause people to make more cost efficient decisions? if, in fact, all we get is cutbacks in benefits, then that isn't necessarily driving efficiency. if, instead, we get health plans, we get employers saying to insurers, look, we want value

based insurance design. we want our employees to respond to the financial incentives, then we're liable to make some progress. >> you did a great job laying out both sides, but which side is it? >> well, eventually we'll have to become more efficient. i don't see the affordable care act moving us in that direction at all. all it's doing is adding costs and adding regulation. we need to cut back on regulation and give the private sector a chance to find a solution. >> dan? >> i'm going to disagree on this one. i think what people are really missing is that this law fundamentally changes the way that insurance companies make money. and they are structuring tighter networks, excludeing the expensive academic medical centers from these networks. it's causing major changes in the delivery system. a lot of doctors are getting squeezed out of those networks and i think it's going to reduce costs significantly.

there are really significant changes in the marketplace right now as a result of this law. and the law also gives hospitals and insurance companies a direct financial incentive to score well on quality metrics, which, again, is something that a lot of people have really not focused on. >> dan, you look like a young guy. >> thanks. thanks. >> i don't know how old you are. >> i'm 49, every minute of it. >> excuse me? >> 49, every minute of it. >> 49, every minute of it. >> do you believe that young people are going to actually buy into obama care? >> yeah, they will eventually. this is a generational shift. and you can't judge this law on the basis of one month of enrollment. fact is, this is a major purchase. and people need to go online, they need to understand the offering, they need to search. but in the end of the day, there are a lot of people. people with chronic illness, heart disease, people with, you know, other kinds of diabetes, other kinds of illnesses who have not been able to purchase insurance in these markets for

years and they're going to go out and buy insurance. >> joe, let me ask you this, there's been a lot of debate about whether congress people and senators will be put on this plan or put their aides on this plan. do you think that's going to change what the law will ultimately look like? >> not at all. that's a little political gainsmgain gamesmanship. people who have health conditions, people who need health care are going to sign up for insurance. that's a good thing. obviously that's the case. the big problem with the president's health plan is that the young healthy people are going to be looking at the premiums and they're going to be saying that's not such a good deal. and, dan, before you say those are cheap premiums because of the subsidy, remember who's paying the subsidy. it's the taxpayers and the people who are already buying insurance seeing their rates go up. >> well, that really varies, actually. i think what's more important for consumers as they start to look at these plans is they

understand the full out of pocket costs they're going to face. i mean, in a lot of ways, this is a republicans health policy dream. these are deductibles of $2,500 for silver plans, $5,000 for bronze plans. these are high deductible plans. the kinds of plans as you were saying will definitely be shifting costs back on to people who are making the health care decision making. so i think looking back on this five years from now after it's already rooted. and i think it will take root. you will see the health policy establishment of the republican party thinking this is not such a bad deal for us. >> a quick question. >> gentlemen, i know you're not macro economists, but it seems to me that the fall in consumer confidence has to be somewhat related to this. there's massive uncertainty here. the stuff we're talking about here is not simple for the average guy on the street. does the lingering effect on that have an effect on the economy? does it become a big issue in

the election next november again? any thoughts on that? >> yeah, there are -- there's a lot of uncertainty. employers. one of the reasons we haven't seen a lot of reporting on what employers are doing is there's uncertainty here. and they didn't want to make big mistakes. so they're probably waiting things out. but the reality is that they're also a lot of firms who have lower wage workers are cutting back on employment are reducing hours to avoid the problems of the regulations. >> i don't see this as -- i don't see this as a macro economic issue. i see this more as a political issue. i think from a macro economic standpoint, all these cancellations notices going out, that's a relatively small number of people. most people get their insurance from their employer. and the employer insurance is relatively stable. it's still, you know -- >> it's relatively small but it's 14 million people. >> dan, i just -- i haven't read this quote to any true

believers. and i'm glad you're here because we have one. this is thomas, he says -- and someone sent this to me. it's amazing that people who think that we can't afford now to pay for doctors, hospitals and medications somehow think we'll be able to afford to pay for doctors, hospitals and medication and a government bureaucracy to administer it, as well. >> this is primarily being done through the private sector. and i think it's important to understand that you have insurance companies, the same insurance companies that offer you your care who are out there now competing to get the care -- >> wait a minute, the private industry's running some of the -- maybe some of the private websites. not running this debacle we're seeing play out in washington right now. >> i'm not makie ining excuses the website. that's a mess. i think the website. >> in general -- in general, now the government's going to have a lot of say and a lot of things.

there will be a bureaucracy. is that going to lower costs or increase costs? >> you know, again, most of this is private companies that are competing. so, yeah, they're supposed to feel this website and can't get it up. that is really not the most important thing. the most important thing is these insurance companies are structuring -- they're exclu excludeing the high-cost providers. >> we've got to leave the conversation there. thank you for joining us this morning. >> my pleasure. >> is that covered? >> what you just said? was that covered? anyway, coming up -- [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account.

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it is november 1st. but the fed will have to wait an extra week for the october jobs data. when we come back, we'll talk to greg ip from the economist and former fed governor larry meyer about the time line for tapering and the economic outlook. and then on monday, two hours with jim bullard. stick around. "squawk box" will be right back. g faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different...

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welcome back to "squawk box" this morning. chrysler is the first of the u.s. automakers to report october sales figures. up 11% compared to the same month last year. slightly better than expected. we should be getting ford's numbers in about an hour and general motors about half an hour after that. lots of automobile data coming at you. we're also watching shares of netflix this morning. baird upgrading the stock to outperform from neutral based in part on the increasing commitment to original content. we like that. content creators ourselves. and also madison square garden reported quarterly profit of 31 cents per share. 9 cents above estimates, revenue also beating consensus.

the company which owns the name sake arena as well as the new york knicks. although, entertainment revenues were slightly lower. they've redone msg over the past two years and it's a lot nicer than it used to be. remember the mystery barge in san francisco's bay we discussed you reca eed earlier there were all kind of stories. turns out it might be the best party boat ever. a local san francisco tv station reporting it'll feature luxury showrooms and a party deck for the tech giant to market google glass and other gadgets. access will be invitation only. the project is reportedly personally directed by google co-founder. and said to be google's attempt to upstage rival apple and its chain of retail stores. some people thought this was going to be some kind of massive floating data center. but this is -- >> for google glass.

yeah. >> this is something. one way to market it. absolutely. >> and some websites said there were -- on some coasts there was google barges. >> i wonder if we have a barge in new york as well. if so, we should probably do the show from the barge. how about that? >> you do the show from the barge. >> i'll do the show from the barge. >> i'll do it from one of robert frank's yachts. >> the faa is loosening rules. you'll soon be able to use your electronics throughout your trip. but connecting to the internet will be prohibited when the plane -- >> how are they going to know? >> they have things. >> how are they going to know whether you actually turn, go to airplane mode or not. and think about all those fights it's going to create. >> if i see you violating, i will raise my hand. >> you're going to raise your hand? how do you feel about those

people, by the way? >> tattle tails. >> you're a serial abuser. >> i am and i've had people next to me -- >> well, i'm kind of those people. i think you're a jerk if you violate those rules. you think you're above the law. >> and then i get in these awful conversations where i try to explain to them -- >> that you are above the law. >> that it's not going to hurt the plane. >> that's what i say to them. and they say, but the rules are the rules and then i say okay and -- >> you're not -- >> under a magazine or something. >> and you keep typing. >> that's amazing, you've admitted you're not comfortable flying that much. >> i fly a lot but i don't love it. >> you don't love it. but i would think if you thought you were influencing -- >> but i don't think i'm influencing. >> how do you know? now you know. >> now i know. >> you used to tell us you were. they told us. >> here's how i knew, all those flights on the gulf stream where the pilot never says anything, i

figure -- on the rare occasion i have to fly, you know, with the regular people -- >> i like the way you're saying this like it's not true. don't think -- it's a good tact. >> thank you. the time line for fed tapering still not set in stone. earlier this morning, we spoke to philadelphia fed president charles plosser. >> i think it would be worthwhile for us to consider how do we get out of this box? how do we get out of this program in a sensible way without confusing it with our interest rate program, our interest rate forward guidance. and we've known for a long time how to move interest rates up and down. and the public, the markets kind of understand that. i don't know much how to move them up and down and we're discovering how difficult that is. >> joining us is greg ip, a cnbc contributor and also larry meyer, co-founder of macroeconomic advisers and a

former fed governor. i'm glad we used that sound bite, i wanted your thoughts on it. larry, as somebody who's been there, what did you think of the idea of changing the parameters? >> it's about time to look at the opportunity to taper. and i think that's the general view on the committee. the question is, is the data supportive? and the chairman has given a very sensible three-part test having to do with labor market conditions, growth momentum and inflation. we're not there yet. the time line depends on the forecast. the probabilities build as we go out and, you know, is there going to be enough data in december? probably not. >> probably not. >> january, maybe. by march, i think compelling. >> i think his point was you can change the parameters by setting this up by saying there's a

limit to this. we can reassess at that point and sit down and say if the conditions still warrant it. we can decide to go ahead with it. but his point is it's a little easier to say no by setting an automatic cap in. >> you don't want anything automatic. the point here is that monetary policy should vary depending on economic conditions. you don't fix things like that so that you're not being able to be -- >> his point was you could go ahead and extend it from there but you would have to vote in the affirmative to extend it. >> they did it the first time. >> they set -- qe-2 was completely different. at the beginning, they set a time, it's what we call a close-in program. qe-2 was an open-ended program, every meeting, essentially, you have to vote whether to continue it or not. that's basically what they do. >> let me jump in here for a second, becky. >> sure. >> i think that one of the points that charlie plosser made was not a controversial one. the notion that you can deliver

the same stimulus by leading more heavily on the promise to keep rates at zero and doing a little less by continuing to buy bonds. i think, though, the fed still -- and by the way, i think that's a sentiment that probably most fomc members can agree with. the problem is they're still bound to this commitment that they continue the bond buying until they have sustainable improvement in the outlook for the labor market. when december comes, i don't think they'll have that. the data they have will still be incredibly polluted by the government shutdown. the recent data on things like jobless claims are not terribly supportive. to start a taper in december absent surprisingly strong numbers, they'd have to come in there with new projections for the economy that have a high degree of conviction. it's possible especially because they consider the biggest negative as the fiscal policy. but that would be a pretty gutsy move in the presence of such bad data. >> what do you think happens, greg? if it's not likely to come in december, which is the same thing larry has said, what are

we looking at? do we know at this point in time? >> there's two possibilities. first of all, the data starts to get better in january and february and makes it an easy call. i think she would like it, i think most of the committee would like it. and i think the markets will have been prepped for it. what if the data is as bad as it was for the last few months. are you still stuck in qe infinity? you have a big effort to review the possibility doing what he referred to. do we pivot away from a policy that focuses primarily on expanding the balance sheet or do we begin guiding people to a more aggressive policy of keeping the rates lower for longer? >> gentlemen, i wonder if issuing the word tapering out of their mouth hadn't resulted in 100-basis point backup in rates, if we didn't see the carnage in some of the currency markets, southeast asia, india, et cetera, might the result in

september have been different? was it really based on real growth and inflation and the jobs market? could it have been those things plus the mess in washington they saw coming? >> well, let me grab that one, bob. i think you raised a good point. can i say all three of those factors were involved? there's no question they were taken by surprise by how much long rates backed up in the united states. and of course, you saw the same phenomenon in the emerging markets. that's why i think it was significant in the last statement they took out the line about the tightening financial conditions to be a factor not to go ahead with tapering. one of the views inside the fed there was a whole lot of crowded bonds. in some sense kind of vented the speculative excess that was there. that means the path going forward is a little bit easier because the hot money has already left. i know there's a lot of skepticism on wall street about that. we had mohammed el erian the other day saying he's very concerned about when this process resumes.

>> i was going to say -- >> could i say that discrete changes come from surprises, could be data surprises. i think it's a little surprising that the big surprises were communication surprises. they happened in june, september, we're on a roller coaster. and so i think that was the issue. and i think greg is exactly right. had a lot to do with market position and market dynamics. the fed was very successful in pushing people into high duration and risky assets. that's what monetary policy does. but it did it to such an extent that made those markets very sensitive and vulnerable to surprises. >> and one other point, if not now, when? the longer you delay this because you're afraid of the market reaction, probably the more severe it becomes. >> right. i would say it hasn't changed, it hasn't gone away. >> exactly. >> gentlemen, thank you both very much. we'll see you both again soon. >> thanks, becky. and coming up, stock picks from our host.

we'll continue our what's working now series. plus, only a small percentage of yachts are made in america, but a louisiana company is trying to capture market share. robert frank will join us next from the ft. lauderdale boat show. and if you're looking for a little weekend reading, go to squawk.cnbc.com, the latest edition of "the talking squawk blog" features our squawking dead halloween special plus an apple a day and team danica invades the "squawk" set. the address again is squawk.cnbc.com.

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welcome back to "squawk box." chevron posting quarterly results this morning. the energy giant posted $2.57 a share. and that was short of the consensus of $2.71. sharon, we've seen that repeated with the big international integrated oil companies. it had been the crack spread and the refining margin which had been weak. more refining companies are coming back to america. are megayachts the next big success story? robert frank joins us from the ft. lauderdale -- wow. why couldn't you be in there? are you above that? >> reporter: no, i'll be below that in a few minutes. i'm going to keep any clothes on for now. >> all right. we need ratings. >> well, listen.

listen, more than half of the yachts sold in the world are purchased by americans, but only about 10% are made by americans. now, there's one company that's trying to change that, trinity yachts, based in louisiana. they're founded in 1988, they have a shipyard that can now build yachts up to 400 feet. it says the quality is just as good as the european builders. take a look at this yacht, it's 190-footer. it's got a wine cellar, 3,000 square foot living room. not one, but two jaquzzis. a helicopter pad and a half basketball court. now, unfortunately, trinity right now is not selling many of these boats, company had orders of 24 new boats in 2008, last year, they had one. their workforce has fallen from 1,000 to 150. wealthy buyers right now, they're just not confident and they have become media targets. >> part of it, i think, is the political climate. you know, you've got to be in

the top .5% not the 1% to afford one of these yachts and they're being vilified in the press right now. they're the wealthy who are taking from the poor and the sad part is, we had a very wealthy american was going to build with us. started hearing all this and he decided not to. the problem is what people don't realize is the american jobs it costs. >> now, guys, they are being helped by a weaker dollar right now which makes trinity more attractive, especially to overseas. 7 of the last 10 deliveries for trinity were to wealthy russians, middle eastern and mexican buyers. maybe we're becoming an exporter of super yachts. back to you. >> robert, you start talking about orders coming in and why it dropped off. is that really something that's just affecting that company? or has it affected other companies too? other ship -- >> no, walking around here yesterday. yeah, talking to all of the ceos. the yachting industry isn't in a

recession. it is in a depression. i mean, if you look at the dropoff in prices, new build volume, this industry is still pretty much where it was in 2009, 2010 at the bottom. it has not recovered. a lot of boats for sale, not many new build. except at the hype end when you look at sort of 250-foot plus like this yacht behind me. those mega mega yachts are selling, but the middle of the market is still really down and out. >> wow. >> you don't have a monitor. you don't have a monitor down there, do you? because i'm not too proud to -- >> all of the -- >> i'm not -- i'm in the -- you can't -- >> you can't see what's going on, robert, but you know who's in the pool right behind you right now, joe. they got shot there. that guy said the top half of 1%. that guy's got to go back and look at some of these figures. people that can afford that are in the top. >> yeah.

>> .0 -- you need scientific notation to afford one of those yachts. >> yeah, i think it's more like .01. i think what he's talking about is the market, as well. and that's around $200,000. >> did you ever see "cape fear." that just happened to me. the end of it where robert -- >> it's amazing how dry your shirt is too. >> yeah. >> it's a special. >> were you hoping i'd have a wet shirt on? >> absolutely. >> really? like a wet t-shirt. >> come on. it's a morning show. >> sorry, bob, robert frank. sorry, i'm apologizing to everyone for that. anyway. >> you just upstaged. >> did i ruin the entire -- >> the segment. >> do you remember "cape fear," he's handcuffed to a part of -- and he's still. >> amazing. >> he was ripped in it.

do you remember? >> he was. totally. >> tattoos everywhere. >> yeah. scales of justice. >> robert frank, thank you again for -- he's -- that's very difficult assignment. coming up, don't close out the trading week without jim cramer's stocks to watch. we're going to head down to the new york stock exchange and see whether he's in the pool. today we brought you an hour with philly fed president charles plosser, on monday two hours with another fed president, jim bullard will join us onset. we'll ask him about the time line for tapering. his economic outlook and a lot more. "squawk box" starting monday at 6:00 a.m. ♪

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welcome back to "squawk box." we're going to go down to the new york stock exchange. jim cramer joins us now. joe, you should know, has been doing "cape fear" routine during the break. i've told him that he has a career clearly. >> 14 years -- >> you don't even understand what's going on. how are you, jim? >> i like the original better -- >> mitchem was in both. i'll tell you why i didn't like the original real quickly. because gregory peck, who is also in both, didn't do anything

wrong in the original. in the second one, nick nolte buried evidence that could have allowed the guy -- the guy had a reason -- robert mitchum was just crazy. >> mitchum was such a great actor. >> wasn't he? >> he was the best. >> we can go a hundred different places. my question because it's the story i'm fascinated by this morning beyond "cape fear," is this vodafone, at&t/nsa situation and whether you think we'll get into a big problem that u.s. companies that ultimately want to use -- is going to become a problem when they try to buy stuff outside the united states, telecom companies and also talked about linova trying to buy blackberry. >> i think there will be a problem. europe is obviously more political than we are. not more divided but more political. there are going to be hearings when there shouldn't be

hearings. >> so if you are in at&t, how much of a problem does this represent to your ability to actually grow? there are a lot of companies that can't grow. their growth strategy is an acquisition strategy. >> they don't have to be in europe. i think africa and latin america are underrated. it doesn't have to be vodafone. at&t is a very smart company, they'll find ways to get growth. >> what did you think of plosser's comments? did you hear any? >> no, i'm sorry. >> the question i'll ask around this table is whether you think what he thinks, which basically is he's hawkish, is whether yellen is going to follow any of the things he thinks. i'll ask bob that. >> i think they'll ignore him. >> just ignore him completely? >> yeah. >> his policy, jim, was he likes transparency but on the other side, on the flip side likes transparency but doesn't want to have any wiggle room. i thought it was sort of --

>> very unusual. every time they come up with something more, it's a hand tied behind the back. >> exactly. bob's right. >> jim, you see the chevron numbers that kind of confirmed what we heard earlier? >> they kind of did preannounce. it does show you the companies that were able to split off from mining have a better model. exxon had a really good quarter and it just got overlooked. by the way, royal dutch did not have a good quarter. there are great nations here. i think exxon -- it's in keeping what they said a couple weeks ago about refining margins. >> miami or fsu? >> no, i like -- go 'noles. >> after what happened with wake? barely beat wake. >> the best game of the weekend by far. >> 8:00. >> okay. they're plays us out. we'll see you on "squawk on the street" in a second.

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the story is replacement demand from the aging fleet here and expansion in asia. >> i think they will continue to gain subscribers. they will win more than most in the new enrollment. >> i'm not going to fight that one either. >> you buy in the low 20s, sell in the high 20s. good cash flow selling at less than five times free cash flow. >> what about time warner cable? >> second largest operator in the company. they're winning as well. new subscribers, in programs,

higher prices and the whole mobile tv, et cetera, applications, another leg of growth. >> you don't get concerned about the battle where they go up against the network, try not to pay some of the -- >> it's certainly a battle and the issue, i think they win it. >> bob, thanks for being here. great having you. >> that does it for us. have a great weekend, everybody. right now it's time for "squawk on the street". >> good friday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber and kelly evans. >> after two straight months of gains for stocks, a big jump. the 10-year yield, some of the fed anxiety pushing gold down to two-week lows today, going for